Compliance
Navigating the Remittance Transfer Tax: What Senders and Providers Need to Know
A 1% excise tax on certain remittances begins January 1, 2026 — here’s how taxpayers and remittance providers can prepare.
By NomadicTax Research Team • 5-8 min read • June 14, 2026
## What Is the Remittance Transfer Tax?
The One, Big, Beautiful Bill Act introduces a **1% excise tax** on remittance transfers sent from the U.S. to foreign recipients when the sender uses **cash, money orders, cashier’s checks, or other similar physical instruments** as payment.([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai)) Those who send these remittances are generally responsible for the tax; however, if the remittance transfer provider doesn’t collect it, liability falls on the provider.([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
## Key Dates & Transitional Phases
- The law takes effect on **January 1, 2026**.([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
- The IRS and Treasury released proposed regulations clarifying definitions, scope, and mechanics. Comments were due by **June 12, 2026**, signaling that regulations are still in draft form.([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
## What Remittance Providers Need to Do
- **Determine taxable funding instruments**: These are physical instruments like cash or money orders. Checks and credit or debit cards generally don’t trigger the tax — unless the provider cashes a check and funds the remittance with that cash.([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
- **Recordkeeping & Reporting**: Providers will need to make semimonthly tax deposits and file quarterly returns with the IRS, likely using Form 720 as part of their reporting.([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
## Considerations for Senders
- If you use **cash or similar instruments**, expect an additional 1% cost on the amount you send.
- If a provider doesn’t collect the tax at the point of service, they may bill you later—or more likely, the provider becomes liable. Consider selecting providers who transparently include all costs.
## Practical Example
**Scenario:** Jane wants to send \$5,000 cash via a remittance transfer provider.
- Under this tax, **\$5,000 × 1% = \$50** in excise tax applies.
- If the provider collects it, Jane pays \$5,050 total.
- If the provider doesn’t collect, the provider themselves is liable for the \$50.
#### Tip
Providers should update their customer-facing disclosures and fee structures now to avoid surprises. Senders should ask whether the provider collects the tax up-front.
## Bottom Line
The remittance transfer tax adds complexity to cross-border cash transfers. **Remittance providers** need to adjust policies, systems, and pricing. **Senders** should be aware of added costs and ask questions about how providers handle the tax.
Prepare now so you’re not caught off guard when the rules fully settle.